The relationship between medical insurance companies and Virgin Active and Planet Fitness have come under fire, with the matter escalating to the competition tribunal.

As reported by the Business Times, Antonio Iozzo from the Body Action Gym based in Bedfordview, Johannesburg, said that wellness rewards programmes offered by Discovery Vitality, Momentum Multiply and Sanlam Reality are anti-competitive as they aren’t offered to smaller independent gyms, limiting expansion.

For example, a Virgin Active member in Bedfordview pays a fee of R1,090 for a 12-month contract, however, with a Vitality subsidy, this fee drops to R272.50.

Lozzo said that independent premium gyms have been unable to attract customers due to the exclusive agreements offered with the two big gym outlets.

Although Body Action previously took the matter to the Competition Commission, it ruled against it, which forced Lozzo to self-refer the complaint to the Competition Tribunal.

He wants the competition authorities to rule that Vitality, Sanlam and Momentum expand their rewards benefits to independent gyms across South Africa.

In response, Virgin Active and Planet Fitness argued that the claim has no merit.

Lisa Short, on behalf of Planet Fitness, said that medical schemes choose which companies to associate the benefits of their members in the hope of increasing healthy lifestyles.

“There are several medical schemes offering benefits to their members whose associations are not limited to Virgin Active and Planet Fitness. We have always offered affordable and flexible membership options, and the majority of Planet Fitness members are what we term ‘public’,” Short added.

Discovery added that it has long-term beneficial partnerships with hundreds of gyms (including Body Action), which allow their members to earn Vitality points.

Sanlam argued that it should not be included in the proceedings as it has no exclusive agreement with gyms or studios.

The case is still in its finding stages at the tribunal and could move to a hearing.

Tough times for gyms

Amidst the current cost-of-living crisis, many South Africans are looking to cut expenses, and gym subscriptions are the main item on the chopping block.

A recent survey by InfoQuest, which used responses from 300 people in May 2023, showed that most cancelled expenses were gym memberships at 28%.

This was followed by DStv at 18% and household insurance at 10%.

The cancellation of gym contracts is a concern for the industry, which has faced a series of economic headwinds in recent years, most specifically the Covid-19 pandemic.

However, speaking to Moneyweb, Virgin Active CEO Dean Kowarski said that the group is close to pre-covid numbers.

“We’ve seen a nice recovery – not back to pre-Covid levels, which is to be expected. In the Covid membership base, there were a lot of what’s called ‘sleeper members’, members who weren’t really using the gym,” Kowarski said.

“So through the Covid period, we lost some of those members, and we are not back to pre-Covid numbers. As I said, access numbers in terms of the percentage of people accessing and using our clubs are back to pre-Covid, in some cases above.”

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Read: Virgin Active launching new app and rewards programme in South Africa